WASHINGTON — The United States seeks healthy economic competition with China even as the country pursues intellectual property to gain economic advantage, Treasury Secretary Janet Yellen said Thursday.
Yellen stressed the importance of equity between the United States and China, while outlining a three-tiered approach to bolstering an estimated $700 billion trade relationship, Yellen said in remarks to the School of Advanced International Studies from Johns Hopkins University on Thursday. Yellen also announced a planned visit to China “at the appropriate time”.
His comments come as Washington, and the Republican-held House in particular, are increasing pressure on Beijing as part of a sustained US backlash against China’s economic tactics.
China has moved away from market reforms “towards a more state-centric approach that has undermined its neighbors and countries around the world,” Yellen said. “This has come as China adopts a more confrontational posture towards the United States and our allies and partners – not only in the Indo-Pacific but also in Europe and other regions.”
The world’s two largest economies can only be competitive through unbiased regulation, she said.
“There is a world in which, as American and Chinese businesses challenge each other, our economies can grow, living standards can rise, and new innovations can bear fruit,” Yellen said. “But this kind of healthy competition is only sustainable if it’s fair to both parties.”
Janet Yellen, U.S. Treasury Secretary, speaks at Johns Hopkins Universitys School of Advanced International Studies (SAIS) in Washington, DC, U.S., Thursday, April 20, 2023.
Ting Shen | Bloomberg | Getty Images
The Treasury chief said the United States trades more with China than “with any country other than Canada and Mexico.”
“American companies have extensive operations in China. Hundreds of Chinese companies are listed on our stock exchanges, which are among the deepest and most liquid capital markets in the world,” Yellen said.
But she argued that China had sought market share for its domestic companies through illegal means and at the expense of foreign competitors.
“It has done this in traditional industrial sectors as well as emerging technologies,” Yellen said of the Chinese government’s efforts. “This strategy has been accompanied by aggressive efforts to acquire new technological know-how and intellectual property, including through intellectual property theft and other illicit means.”
The Biden administration’s three-pronged proposal to develop economic relations with China emphasizes national security and the protection of human rights.
“We will communicate clearly to [China] our concerns about his behavior. And we will not hesitate to defend our vital interests,” Yellen said. “While our targeted actions may have economic impacts, they are driven solely by our concerns about our security and our values. Our goal is not to use these tools to gain a competitive economic advantage.”
Safeguarding certain Chinese military and security network technologies is ‘of vital national interest’, especially in light of China’s ‘no-holds-barred’ partnership with Russia in its ongoing invasion of Ukraine , Yellen said. Ukraine’s allies have been watching closely whether China will offer military support to Moscow.
“We will not compromise on these concerns, even when they impose trade-offs with our economic interests,” she said, adding that the Treasury Department and other agencies will use their sanctions authorities to counter encroaching threats. .
The agency issued a series of sanctions after a Chinese spy craft flew over parts of the United States in February, while the Commerce Department imposed trade limits on five Chinese companies for allegedly trying to evade the US. US controls on exports to Russia.
Yellen pledged to partner with U.S. allies to counter China’s “unfair economic practices” while advancing “our vision of an open, fair, and rules-based global economic order.” She also called on Chinese President Xi Jinping to keep his promise to cooperate on global issues such as climate change and over-indebtedness.
“We call on China to keep its promise to work with us on these issues – not as a favor to us, but out of common duty and obligation to the world,” she said. “Addressing these issues together will also advance the national interests of both our countries.”
The Chinese Embassy in Washington DC did not immediately respond to a request for comment.
Lawmakers focused on the rivalry between the two powers during the ongoing debate over raising the $31.4 trillion debt ceiling. If the US doesn’t, it could default on debt for the first time this summer. Yellen and his colleagues have repeatedly warned of the catastrophic consequences of default, including economic damage and international apprehension about the full confidence and credit of the United States.
On Wednesday, House Speaker Kevin McCarthy, R-California, promised that a GOP bill to temporarily raise the debt ceiling in exchange for spending cuts would also reduce US dependence on China.